The Impact of Increase of Taxation in Behavior of Consumers in Developing Countries, Case of Albania

Abstract

Income in developing countries represents a vital factor in the wellbeing of inhabitants and the whole society. The consumer behavior changes in linearity with the change, meaning so increase and decrease, of the tax rate. Albania, as a post-dictatorial country and yet a transitional economy with a very fragile economy, has been having a very unstable tax policy. The change of taxes had an impact on the development of the economy, so periods of time with low or flat taxes are accompanied with higher incomes and a higher rate of GDP. Constructive state policy in the field of consumption plays an important role in sustainable social and economic development of the economy. The state regulates the consumption process by means of fiscal policy, building the socially oriented budget of the country, creating a fair taxation system for the population that stimulates domestic demand and economic activity. The aim of this article is to verify if the income after taxes influences in the consumer behavior. If there happens to be found a linear correlation between the income and consumer behavior and we know that higher tax rate means a smaller amount of net income what is the correlation between taxes and consumer behavior ? In this continuity of the article the major tasks are: analysis of income level to the type of consumer behavior and social group of the consumers; analysis of the influence of Albanian taxation system on the possibilities of increasing the domestic demand of different population groups; defining the measures intended for increase and growth of domestic demand. Keywords: taxation system, income level, consumer behavior.